Last week the European thermal coal market experienced a further drop below USD 290/t amid ample stocks, falling gas prices and the release of new instructions by the European Commission (EC), suggesting easing of sanctions on Russian coal supplies for the purpose of ensuring global energy security.
On September 19, 2022, the EC issued a clarification for coal shipping guidelines with the important caveat that European companies are allowed to transport Russian material to third countries, including transit through the EU, as well as to provide insurance services. The measure, which has been criticized by Poland and the Baltic states, is intended to cool prices and prevent a global energy crisis.
Indices of South Africa’s High-CV 6,000 material tumbled below 270 USD/t, following the European quotations. An improvement in coal loading on the Transnet rail line to the Richards Bay Coal Terminal (RBCT) also put pressure on quotes. September shipments are expected to reach 4.5 mio t, versus 4.2 mio t in August.
Canadian mining company African Energy Metals plans to form a joint venture with Black Hole Aurum to acquire coal assets in Tanzania, caused by strong demand from Europe. The companies have already signed a memorandum of understanding for one of the projects.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao rose by 12 USD/t up to 221 USD/t w-o-w. The Chinese market continues to face an increase in quotations, driven by concerns over domestic production decline as well as active coal consumption, resulting from the hot weather in some regions of the country. A fatal accident on September 16, 2022, halted operations at 25 mtpa Tashan mine, one of the largest in Shanxi province.
Chinese authorities reported that autumn maintenance on the Daqin rail line will be carried out from September 28 to October 22, 10 days ahead of schedule, that also contributes to a worsening of supply on the spot market and a strengthening of indices.
The rise in Indonesia’s 5,900 GAR to 189 USD/t was due to lower supply because of heavy rains in Kalimantan, as well as increased demand from China and European countries.
Australian 6,000 coal indexes are holding at 430-435 USD/t as heavy rains limit shipments at the Port of Newcastle. Prices are also supported by sustained demand from Europe and India.
Australian metallurgical coal quotes remain below 260 USD/t as global steel market conditions continue to deteriorate amid rising input costs caused by rising electricity prices, resulting from EU sanctions against Russia. In addition, Australian authorities in August and September softened their approach to approving new metallurgical coal projects.
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